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1 Note 01: What is a CCA? Revised July 2017 What is a Climate Change Agreement? Climate Change Agreements (CCAs) were set up by the UK Government to encourage greater uptake of energy efficiency measures amongst companies in energy intensive industries. CCAs are part of the Government s policy to reduce use of energy and hence reduce CO 2 emissions. CCAs provide companies with a significant financial incentive a discount on the Climate Change Levy (CCL) which is applied on electricity, gas, propane and coal, plus, exemption from the Carbon Reduction Commitment (CRC). To retain this financial benefit each company must achieve an energy saving target set for a two year period. Participation in a CCA is voluntary, but as the financial incentives are very strong almost all sites that can have a CCA apply for one. CCAs were introduced in 2001 and initially ran to We are now in the second cycle of CCAs, which run from 2013 to Some of the rules have changed slightly but many aspects of new CCAs are very similar to the old ones. Who is eligible for a CCA? Sites, or facilities as known in CCAs, are eligible for a CCA if they either undertake a Part A process covered by the Environmental Permitting Regulations, or, their sector/process has been deemed to be energy intensive by the UK Government. A list of all the sectors that have a CCA and the associated eligibility criteria can be found in the CCA Operations Manual ( The eligibility criteria for the Food and Drink Sector CCA is: A facility belongs to the food and drink sector if it is a facility which treats and processes materials intended for the production of food products. For this purpose food includes drink, articles and substances of no nutritional value which are used for human consumption and articles and substances used as ingredients in the preparation of food. At an installation or site where refined salt for use in food products or supplements is prepared or processed from minerals. Energy that is not used by the eligible process may only be include by applying the 70/30 rule. This rule allows the energy used by an entire site to be included in the CCA if the non-eligible energy is less than 30% of the total primary energy used at the site. Further information on the 70/30 rule is contained in FDF CCA Note 02 Applying for a CCA. FDF CCA Page 1 of 5 What is a CCA?

2 What are the benefits of having a CCA? From the Government s perspective the key benefits of CCAs are (a) to help achieve reductions in energy use and greenhouse gases (GHGs), and (b) to protect energy intensive industries from the tax burden of the CCL and CRC. From the perspective of a company that has a site that is eligible for a CCA the benefits are very positive. They include: (a) A significant discount on the CCL. The table below shows the rates of CCL and the maximum discount that can be obtained via a CCA. Fuel Electricity (p/kwh) Natural Gas (p/kwh) LPG (p/kg) Coal (p/kg) CCL Rates from 1 st April Maximum discount due to a CCA Up to 31 st March 2019 From 1 st April % 93% % 78% % 78% % 78% Taken from: (b) (c) Exclusion from the CRC. This is currently worth around 16 per tonne CO 2 emitted (in relation to both gas and electricity use). This approximately doubles the benefit of the CCL discount if your organisation is big enough to be in the CRC. However CRC will be abolished after 31 st March CCL rates will increase from 1 st April 2019 to offset for the loss of money raised through CRC. Increases to the CCL discount will compensate for the CCL rate increases from 2019 to Energy saving benefits. CCAs drive energy efficiency improvements and where this happens this will result in energy cost savings. In many cases the energy cost savings are greater than the CCL discount. (d) Corporate image benefits. Many companies have sustainability targets and Corporate Social Responsibility programmes that include targets for reducing GHG emissions. Achieving CCA targets can provide a useful input into such programmes. FDF CCA Page 2 of 5 What is a CCA?

3 What do Companies have to do to gain these benefits Each site or company that has a CCA is given an energy saving target, either measured relative to factory output (e.g. kwh per tonne of product) or just absolute energy use (e.g. kwh). Some sectors have agreed that savings can be measured in carbon as well as energy. The target is set as a series of efficiency improvements compared to a base year (usually 2008). Each target period is two calendar years in duration as illustrated in the timetable below. At the end of the target period the energy efficiency performance is assessed and compared to the target that has been set. If the target is achieved then the CCL discount is retained for the next two year period. If you fail to meet a target all is not lost. There is a buy-out mechanism that allows a company that has failed its target to buy CO2 allowances to offset the extra CO2 emitted. The target is always a series of steps towards better energy efficiency over the 4 target periods, compared to base year performance. For example the steps could require an improvement of 9% at the first milestone followed by 3 further steps of 3% each. FDF CCA Page 3 of 5 What is a CCA?

4 Who are the key organisations involved in CCAs? The Government has set up CCAs in industry sector groups. There are separate CCAs for each main industrial sector. This approach allows the CCA energy efficiency targets to be customised to the circumstances of each industry sector. A lead body in each sector, usually the relevant Trade Association, is responsible for operating their sector s CCA. There are currently 51 separate sector CCAs covering around 10,000 individual sites, a list can be found here: A number of different organisations play important roles in the operation of your CCA. The key players are as follows: BEIS (Department for Business, Energy and Industrial Strategy) Are the Government department responsible for CCAs. They have responsibility for policy development and decisions regarding CCAs and for target negotiations. Environment Agency (EA) The EA administers the CCAs on behalf of BEIS. They are responsible for the day to day operation of CCAs, using the policy set by BEIS. They are responsible for registering every CCA and ensuring that every company complies with the requirements of CCAs. They are also responsible for issuing penalties to any company that has breached certain rules. Technical Consultant BEIS and EA get support from a Technical Consultant to check certain data such as eligibility information on Application Forms and energy data submitted at a milestone. HM Revenue and Customs (HMRC) HMRC are responsible for checking that the CCL discount is claimed correctly. FDF Climate Change Levy Agreement Ltd (FDF CCA) FDF CCA run the CCA for the food and drink sector and act as a key point of contact for negotiations between the sector, BEIS and the EA. They play a crucial strategic role to ensure that the CCA rules are fair and reasonable for companies in the food and drink sector and that targets are set in a fair and appropriate way. SLR SLR carry out the detailed administration of the FDF CCA on behalf of FDF CCA. They are responsible for all day to day activities such as processing applications, dealing with variations, gathering annual energy and production data from each facility and helping ensure that any companies that fail to meet a target are given appropriate information so that they can retain the CCL discount. SLR also provide on-going technical and administrative support to CCA participants via a telephone help desk and a dedicated CCA website page (see next page). FDF CCA Page 4 of 5 What is a CCA?

5 For further information please contact SLR s FDF CCA helpdesk: +44 (0) fdfcca@slrconsulting.com or visit The full suite of FDF CCA Guidance Notes are listed below and can be accessed via contacting the helpdesk or visiting the website. Guidance Note Title 1 What is a CCA 2 Applying for a CCA 3 FDF CCA Administration Charges 4 Completing HMRC PP10 and PP11 Forms 5 Timetable of FDF CCA Activities 6 Obligations under your CCA including audits 7 Reporting data at each Target Period 8 How CCAs interact with other schemes 9 Glossary and Abbreviations 10 What happens if NOVEM target 12 Stringency tests on targets 13 HMRC State Aid Reporting FDF CCA Page 5 of 5 What is a CCA?